Global Exchanges Have A Lot To Be Thankful For

Russ Chrusciel
, SubscriberI comment on key changes across derivatives trading and exchanges.Opinions expressed by Forbes Contributors are their own.

It’s hard for me to believe it’s Thanksgiving week—the kick-off to the holiday season of 2011. I don’t know about most of you, but it seems like just yesterday that I caught some post-turkey football and put up my Christmas tree. Thanksgiving often gets trampled or left behind in retailers’ race to get to the lucrative finish line of Christmas. However, as we approach Thanksgiving, I think it’s an appropriate time to stop and take inventory of the many blessings we have as individuals and as a nation. Let’s look at some of the key exchanges across the globe – and lay out what each of these exchanges can be thankful for as we all get ready to dig into our stuffing and cranberries later this week.

(Image via Wikipedia)

NYSE Euronext should be most thankful for the fact that their planned merger with the Deutsche Borse is still on track to close in 2012. NYSE Euronext, in pursuing by far the largest (and most impactful) exchange merger across the trading landscape, can also be thankful that U.S. regulators have been fairly kind and accommodating throughout the whole merger progression. Furthermore, NYSE Euronext should be grateful that Deutsche Borse has had to bear more of the initial regulatory scrutiny in Europe for the deal. Even the recently proposed remedies given to the EU antitrust authorities – notably selling licenses for duplicate single listed derivatives and allowing others to clear trades as part of Eurex clearing – are certainly manageable for NYSE Euronext.

Deutsche Borse can be thankful that the proposed merger has been well-received by U.S. regulators and that NYSE Euronext has proven itself to be a consistent partner in the ongoing merger process. In addition, the Deutsche Borse can be grateful that EU antitrust authorities seem to be pretty accommodating in bringing this merger to eventual completion. Granted, Deutsche Borse (along with NYSE Euronext) just presented the latest round of proposed remedies to overcome antitrust objections. As far as I can tell, all indications are that this merger will get completed in 2012. It’s just a matter of what exact shape the newly merged global exchange will look like.

Passing the cornucopia along, the CME Group should be quite thankful for 2 things: Illinois legislators who are willing to create tax relief and longer-term incentives to have CME Group retain its Illinois base, as well as a handful of other state governments in the U.S. who are more than willing to woo the CME Group should any new deal fall through with the State of Illinois. In other CME Group news, I’m sure the exchange is indirectly grateful that MF Global’s bankruptcy forced CME Group to vigorously review its policies around clearing, collateral and account structures. In any case, it’s likely CME Group will serve the trading community more effectively after learning lessons from dealing with the MF Global bankruptcy.

Our Canadian neighbors to the north celebrate Thanksgiving a bit earlier than we do, but this year I’m sure the TMX Group was thanking their lucky stars that the Maple Group kept the TMX Group as a Canadian entity. Though the London Stock Exchange sought to create a trans-Atlantic exchange model, TMX shareholders were not as fond of a merger with their overseas counterpart, and it seemed like TMX Group simply felt more comfortable with a singular market focus. I’m curious to see if the TMX Group is still equally thankful about this development a few years from now as global markets continue to evolve.

Lastly, the BRICS exchanges (specifically Brazil’s BMF Bovespa, Russia’s MICEX, India’s NSE and BSE, Hong Kong’s HKEX on behalf of China and South Africa’s JSE) can be most thankful for the growing clout and influence of each other. That is, these exchanges are the face of surging financial activities across these nations, and each exchange’s development almost seems to spur the other exchanges to similarly challenge themselves. Although the BRICS exchanges have not yet fully extended their offerings compared to their more established counterparts, if the BRICS exchanges continue to find new and innovative ways to draw in trading activity, the “old guard” exchanges across the U.S. and Europe will have to adapt to retain financial market share.

I encourage each exchange to count its respective blessings and to dedicate itself to leveraging these blessings to create a more fluid, flexible and customer-focused marketplace in the years to come. And I encourage each of you to reflect on your individual blessings—and by all means, have a second helping of that pumpkin pie!